Real estate taxation · Implementation Instruction
Allowance of Real Interest Expenses in Calculating the Gain on the Sale of a Right in Real Estate: 16/2003
Summary
As at the date of its publication (2003), the Instruction explains section 39A of the Real Estate Taxation Law, added by Amendment No. 50, and the judgment in CA 4271/00 M.L. Investments and Development, under which real interest payments on a loan taken to purchase the right in real estate or to improve it may be deducted from the gain. The cumulative conditions: the interest is not deductible under the Income Tax Ordinance, the loan was taken close to the purchase or improvement and not from a relative, and it is secured by a mortgage, pledge or caveat (or the right is registered in books kept by the double-entry method); the deduction is limited to the amount of the acquisition or improvement value and to the maximum interest rate under the Interest Order, 13%. For an apartment used by its owners as a residence or standing empty, the interest will be allowed against the gain, whereas for a let apartment in which the interest is deductible under the Ordinance it will not be allowed. The Instruction also establishes a "green track" for submitting the loan documents already at the time of purchase, and provides that interest incurred by a testator or donor who continued to repay the loan will not be allowed.
The summary was written by the office and reflects the instruction as of its publication date. The binding text is the official Hebrew publication, and the instruction may have been updated or affected by later legislation and case law. The English title and summary are an unofficial translation.
Publication details
- Type
- Implementation Instruction
- Number
- 16/2003
- Publication date
- 31.12.2003
- Topics
- Betterment tax, Reporting and procedures
- Sections of the Law mentioned
- 39א 39 85 47
Related publications
Official document
Source: The publication on the Israel Tax Authority website (gov.il, Hebrew)
Suggested citation
Israel Tax Authority, Implementation Instruction 16/2003, "Allowance of Real Interest Expenses in Calculating the Gain on the Sale of a Right in Real Estate: 16/2003" (31.12.2003) [Hebrew]
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